Monday, January 16, 2012

Market Summary -- 16th Jan 12

FTSE STI closed 2,756.49, down 35.05 points or -1.26% with a total volume of 912M and a total value of S$762M.  Total number of advance vs decline was 127 vs 301.  Of the 30 component index stocks, 4 closed positive and 26 closed negative.  The 4 gainer component stocks were :-

1. JMH 400US$  +0.310
2. JSH 500US$  +0.180
3. Olam  +0.030
4. SIA Engg  +0.030

The top 5 loser component stocks were :-

1. Jardine C&C  -1.300
2. DBS  -0.370
3. UOB  -0.160
4. HKLand US$  -0.150
5. SGX  -0.140
5. F&N  -0.140

US markets closed in the red with at least 0.3% drop after news of S&P downgraded 9 EU nations on their rating which include France, Italy and Spain.  Asian bourses were also in the red for the day with Nikkei closed -1.43%, SSE -1.71% ahead of its 4Q and FY2011 GDP release and HSI -1.00%.  STI in line with regional bourses closed -1.26% in a thin volume day of less than 1 billion as investors cashing out after recent run up and stay cautious.  Only 4 of the 30 index stocks managed to register positive closing.

The S&P downgrade was not something of a surprise as it has been talking for past months.  The reason citing for the downgrade was due to the delay action by the country leaders in resolving the debt crisis but S&P's action is also considered a delay making it looks like "pot calling kettle black" scenario.  The impact of the downgrading will be affecting the EFSF which might hinder its ability to raise the required amount.  Furthermore, the debt swap between banks and Greece has stalled last Friday and will resume on 18th Jan.  Investors were also concerned of banks might not want to take the 50% haircut as agreed on earlier on during the EU Summit and that might force Greece into a systematically default.

US markets will be closed for holiday tonight but they were able to reverse earlier loss of more than 1% last Friday after news of the downgrading.  European bourses were at the moment mixed ahead of French bond auction later on.  The bond auction will be very much closely monitor as it will be the first after the downgrade and should it is not well received that means investors are very concerned about the rating downgrade.

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